Differences Between Residential And Commercial Loans
When you go to apply for a loan you will find that there is a rather large difference between a residential and a commercial loan. This means that you will need to understand the differences in advance so that being unprepared does not hinder the application and approval process. You also will be sure to get a better deal when you understand more about the process and information needed to complete either one. Here is a brief explanation showing the difference between a commercial and a residential loan.
The Application Process
The process of application will vary in most of the details as well as in the terms of the loan. A residential loan is based almost entirely on the finances of the person getting the loan. A commercial loan on the other hand depends on the profitability of the property at the time the loan is taken out.
Residential Loan
A residential loan is designed for a building for one to four family units. For a building that houses more residents than that you will need to get a commercial loan.
Residential loans require that the borrower provide the lender with personal financial information. Generally this will require tax returns for the previous two years pay stubs from your place of employment and at least three month’s worth of your bank statements.
A form 1003 Universal Residential Loan Application will also need to be completed and filed. This form is applicable in most states but some additions will need to be added in some locations.
Near the end of this form a lender is required to add a section may be in an attachment if you are applying for a balloon loan. It includes notice that you have opportunity to refinance with a guarantee to do so but it is conditional upon your being able to meet the qualifications at the time of your new application. Otherwise you must be ready to pay the loan in full when required.
Your financial information will also be checked. This means that your credit score will be examined and your debt to income ratio is going to be scrutinized.
Your application will then be forwarded to the lender for their approval. Other documents will then be ordered and need to be completed before the loan can be approved. This will include papers like property appraisals title search and escrow and flood certification. Also a lock on the loan will need to be included if appropriate.
Lender’s Role
Once all the paperwork is in the lender’s hands then he or she will review the paperwork. The 1003 and your credit will be checked and verified. Other information that you have included will also be verified. Various conditions will need to be cleared and once that is done the final documents are drawn up and a closing date is set.
Commercial Loan
The application process for a commercial loan is much different than that of a residential loan. The main difference is that a commercial loan is not at all based on your income and for this reason the details of your personal finances are not the basis of determining whether the loan is approved or not.
Application Process
The process starts out by obtaining the financial situation of the commercial building itself. This means that the documents showing income and expenses of the property for the last two years will need to be collected. Another main consideration will be the current amount of rent being collected every month. This will become the basis of how much of a loan that can be obtained.
The broker then takes this information and analyzes it in order to make overall statements that he or she will submit to the lender. These statements include a net cash flow NCF loan to value LTF and a debt service coverage ratio DSCR.
The main consideration here is that there is a sufficient income at the present time to be able to provide the commercial property with a profit from day one. Lenders will look to make sure that there is at least a 1:1.1 to 1:1.25 ratio of the monthly payment to the amount of profit that is brought in after all other expenses. Some lenders may even want a slightly higher ratio before a loan will be given.
The Lender’s Role
Once the lender receives the paperwork from the broker then he or she will review all the documents. A quote will then be sent to the borrower based on this data.
Various services will also be ordered to make sure that the property is a good investment on the lender’s part. An appraisal will be required a title search and a credit check will be necessary. Under some circumstances engineering and an environmental verification will also need to be preformed.
Once everything comes back and is evaluated then the new terms on the loan are issued and a closing date is set. The buyer then looks over the terms makes sure they are acceptable and gets ready for the big day.
About the writer: Brandi Cummings is a leading telecommunications consultant specializing in 800 number call capture technology for real estate professionals. Learn more secrets and tips on how to make a call capture system work for you at www.realtyone800.com.
Costa Rica Luxury Real Estate Agents
Costa rica luxury real estate has been attracting expatriates from America for years now. Costa rica real estate agents say that most home owners originally come to Central America for business or pleasure but are quickly seduced by the laidback atmosphere lush tropical scenery and vibrant culture. This Spanishspeaking country nestled between Nicaragua and Panama is home to 4.1 million residents as well as 1.7 million tourists and boasts a high literacy rate 96 and low unemployment 4.6. The democratic republic ran by scar Arias Snchez is as neutral as Switzerland and warmly encourages foreign investors.
Since the Costa rica luxury real estate market is based on the US dollar rather than the Euro Americans find that the properties are surprisingly affordable. Costa rica real estate agents promote everything from beach villas in Jaco to rainforest retreats on Mt. Arenal. The best way to find a desirable piece of Costa rica luxury real estate is to fly in for a visit and have one of the local Costa rica real estate agents show off various properties. Many investors impetuously purchase online without ever seeing the property only to be disappointed later. Certain areas like the San Jos Metro are seeing some of the effects of rapid urbanization prompting land redesign.
On the other hand there are many picturesque plots of Costa rica luxury real estate to purchase. Roughly 70 of the population lives in Costa Rica’s Central Valley region which has something for everyone. People who love romantic restaurants and old stone churches will love Santa Ana while those looking for proximity to amenities may choose Alajuela. Grecia was voted the “cleanest town in Latin America” Escaz is home to expat ambassadors who work downtown Zarcero is a beautiful village suitable for gardening and San Vito is the epicenter of coffee production.
Costa rica real estate agents say if expats were to drive 24 miles South of Quepos they’ll find the quaint village of Matapalo a beachside settlement tucked away from the hustle and bustle of tourism. Similarly Dominical has become a foreigner favorite offering pristine surf conditions. Puerto Jiminez is another common nesting ground boasting a higher population. For those looking for more of a cultural / Caribbean flavor most of the African American and Chinese minority populations settled in Puerto Limn where it’s a little more exotic a little wilder and a “little more REAL” according to one new resident.
About the writer: Specializing in Costa Rica luxury real estate Coldwell Banker Jaco is the premier real estate resource in the Jaco Costa Rica area. Stunning breakers luxurious estates and unsurpassed services make Coldwell Banker Costa Rica the premier real estate connection.
Considerations When Buying An Etobicoke Condo – What Do I Really Own?
It seems as though condominiums are all the rage in terms of housing market sales these days particularly in cities such as Etobicoke. Condos in Etobicoke are generally very competitively priced when compared to single family dwellings and they also enjoy the convenience of location. There are some things to think about before you purchase that condo in Etobicoke though; lets take a look.
Potential resale value. If you take a look at the current trends in condo advertising you will see that a major point of appeal is the modern living style that the latest condo developments utilize and embrace. Its important to understand that this is unlikely to change in the next ten years but your ability to market your own condo as modern certainly will. New developments are going up every year so you might have a problem fetching an appreciated price for your purchase.
Narrow market. Not only will your condo possibly lack a good resale value due to competition but your potential buyer market will also be narrow. Most condos in Etobicoke are designed for individuals or small one child families. Even so most families will choose a yard over a recreation club so you are limiting your market. For seniors this may not pose an issue at all but for young singles it is something to think about.
No property! Owning a condo means that you own a space within a building with no real claim over the building itself or on the land upon which the building has been erected. Again that is fine for many people but those who love to landscape may find themselves pining for some space in which to work.
Decisions en masse. It is also important to understand that owning a condo means you are not allowed to make individual decisions about your living space. Even renovations will have to be approved by the condo board as a whole so your decisions are up to your neighbours. This extends right out to the building as a whole; if you are fine living with a group decision then you will have no problem here.
In many cases these potentially negative considerations of condominium ownership in Etobicoke are negated by the many benefits of the transaction. Convenient locations an affordable price and several amenities are always appealing to certain demographics so if condo living is right for you go ahead and own it!
About the writer: The condo industry has been booming in Etobicoke with dozens of new condo Etobicoke towers being erected each one offering a unique home buying opportunity.
